Clarus Financial Planning, Inc. A State of Illinois Registered Investment Advisor

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1 Form ADV Part 2A February 17, 2015 Clarus Financial Planning, Inc. A State of Illinois Registered Investment Advisor 312 W. State Street, Suite 106 Geneva, IL Phone: This brochure provides information about the qualifications and business practices of Clarus Financial Planning, Inc. If you have any questions about the contents of this brochure, please contact us at or Info@ClarusPlans.com. The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission (SEC) or by any state securities authority. While the firm and its personnel are registered with the State of Illinois, it does not imply a certain level of skill or training on the part of the firm or its personnel. Additional information about Clarus Financial Planning, Inc. is available on the SEC s website at Click on the Investment Adviser Search link and then search for Investment Adviser Firm using the firm s IARD number, of 10

2 Material Changes Since our last filing on January 1, 2014, we have updated the Financial Planning Program guidelines listed in Section B. 2 of 10

3 Table of Contents Form ADV Part 2A... 1 Clarus Financial Planning, Inc Material Changes... 2 Table of Contents... 3 Section A Advisory Business... 4 Section B Fees and Compensation... 5 Section C Performance-Based Fees and Side-by-Side Management... 6 Section D Types of Clients... 6 Section E Methods of Analysis, Investment Strategies and Risk of Loss... 6 Section F Disciplinary Information... 7 Section G Other Financial Industry Activities and Affiliations... 7 Section H Code of Ethics, Participation or Interest in Client Transactions, and Personal Trading... 7 Section I Brokerage Practices... 7 Section J Review of Accounts... 8 Section K Client Referrals and Other Compensation... 8 Section L Custody... 8 Section M Investment Discretion... 8 Section N Voting Client Securities... 8 Section O Financial Information... 8 Section P Requirement for State-Registered Advisers... 8 Part 2A Appendix 1 Wrap Fee Program Brochure (Not Applicable)... 8 Form ADV Part 2B Brochure Supplement... 9 Liane Warcup, CFP... 9 Clarus Financial Planning, Inc Educational Background and Business Experience of 10

4 Section A Advisory Business Clarus Financial Planning, Inc. has been in business since Liane Warcup is the President and sole owner of the firm. We hold ourselves to a fiduciary standard, which means our firm and its associates will act in the utmost good faith and perform in a manner believed to be in the best interest of our clients. As fiduciaries, we are obligated to put you our client first. We provide financial planning and investment advisory services to individuals and families on a Fee-Only basis. Our services are provided either on an ongoing basis through a monthly fee ( Financial Planning Program ) or on an hourly, as-need basis ( Hourly Consultation ). Financial Planning Program Our Financial Planning Program is designed for clients who want ongoing help with their finances. Services include annual portfolio rebalancing instructions, an annual financial plan update, and an annual review meeting. We provide you with Financial Snapshot and Action Plan reports at the annual review meeting. The Financial Planning Program also includes ongoing financial planning advice as well as access to our portfolio aggregation and financial planning applications. As a new Financial Planning Program client, you meet with us over a series of meetings to address gaps in your personal finances, establish an investment strategy, and create a financial plan. Hourly Consultations We provide hourly, as-needed consultations to clients who first engaged Clarus between 2005 and These services may be general in nature or focused on a particular area of interest or need depending on each client s unique circumstances. We do not intend to take on new Hourly Consultation clients after December 2013, but reserve the right to do so. New Hourly Consultation clients begin with a Get Started Session. This initial engagement consists of a 90-minute meeting covering the topics of your choice. You receive oral advice during the meeting followed by a written summary of the recommendations provided during the meeting. After you have completed a Get Started Session, you can request our services at any time. We discuss and agree upon the scope of each subsequent engagement at the time you request service. Each engagement is concluded when we provide you with recommendations. We have no responsibility to provide you with advice between engagements. We encourage periodic reviews but it is your choice and responsibility to initiate these reviews. Investment Advisory Details Our investment advisory services are tailored for each client. We do not directly manage or monitor your investments, nor do we have discretion over or custody of your assets. Rather, we provide investment recommendations for you to implement using mutual funds and exchangetraded funds with a preference for low-cost index funds. Our investment advice is focused on helping you determine and choose the appropriate target percentages (i.e. asset allocation) and specific investments for your portfolio. We can provide specific instructions on how to reallocate your investment accounts but you are responsible for implementation. We do not make trades on your behalf. We encourage you to meet with us on an annual basis to get instructions on rebalancing your portfolio to its target percentages. Hourly Consultation clients are responsible for initiating these reviews. In addition to our investment advisory services, we provide financial planning services on topics such as retirement planning, Social Security optimization, risk management (life, disability, longterm care, health, home, auto, and umbrella insurance), college savings, cash flow and debt management, work benefits, and estate and incapacity planning. 4 of 10

5 Section B Fees and Compensation We charge for our services on a flat fee or hourly basis depending on our written agreement with you. This is our only form of compensation. Financial Planning Program New Financial Planning Program clients pay a one-time initial fee of $1,200. All Financial Planning Program clients pay an ongoing monthly fee based on financial complexity as outlined in the table below. The monthly fee will be determined at the introductory appointment, stated on the Client Service Agreement and will not be changed without written consent. The Initial Fee for new Financial Planning Program clients is due when you sign our Client Service Agreement. Financial Planning Program monthly fees are due on the last business day of each month. You pay us directly for our services by electronic payment. If you request to terminate as a Financial Planning Program client, we will refund any unearned, pre-paid fees from your initial fee within twenty days of receiving your written termination notice. We will calculate the refund amount based on the equivalent hourly fee we have earned prior to your termination notice. We will not refund any monthly fees since they are paid in arrears. It is your responsibility to stop automatic monthly payments once services are terminated. Hourly Consultations New clients are charged a flat fee of $650 for a Get Started Session, which is described above in Section 1 Advisory Business. After the Get Started Session, returning clients are billed on an hourly basis in six-minute increments. Our current hourly rate is $260 per hour for Certified Financial Planner professionals. Our fees are not negotiable but we may provide discounts at our discretion. The fee for a Get Started Session is due at the completion of the meeting. Fees for subsequent hourly services are billed at the completion of each engagement. You pay us directly for our services by check or electronic payment. 5 of 10

6 If you terminate an Hourly Consultation engagement prior to its completion, we will refund any unearned, pre-paid fees within twenty days of receiving your written termination notice. We will calculate your refund by subtracting the fees for the hourly services we have earned prior to your termination notice from any pre-payment you have made. External Fees If you follow our investment advice, you may also incur separate fees and expenses that are charged by mutual funds and/or exchange traded funds. We recommend that you review each investment prospectus for a complete explanation of these fees and expenses. In addition, you may incur separate transaction costs or administration fees from brokerage firms. We recommend that you obtain a complete schedule of fees from your brokerage firm. We do not receive any portion of these other fees. We do not receive commissions or third-party payments of any kind. Section C Performance-Based Fees and Side-by-Side Management We do not earn fees based on the performance of your assets. Our only form of compensation is the fee paid directly by our clients. Section D Types of Clients Clarus Financial Planning, Inc. primarily serves individuals and families. We require new Financial Planning Program clients to pay an initial fee of $1,200 and an ongoing monthly fee as shown above in the Fees and Compensation section. Hourly Consultation clients begin with a Get Started Session for a flat fee of $650. We have no other minimums or ongoing requirements of our clients. We reserve the right to decline services to any prospective client for any nondiscriminatory reason. Section E Methods of Analysis, Investment Strategies and Risk of Loss Our investment advisory services focus on helping you determine an appropriate investment mix (i.e. asset allocation) for your accounts and total investment portfolio. We will give you an asset allocation recommendation that is based on 1) the results of a risk tolerance discussion, 2) your past behavior during volatile markets, 2) the amount of time you expect to be invested, and 4) your need (or lack thereof) to take risk to meet your stated goals. Once we determine the target percentages for each asset class (i.e. distinct investment type) in your portfolio, we provide you with specific instructions on how to reallocate your account(s) to meet the asset allocation we have recommended. We recommend that you invest in mutual funds and exchange traded funds within your accounts, and use low-cost, passively managed index funds whenever possible. We do not provide recommendations for buying individual securities such as individual stocks or bonds but we do take existing individual securities into account when giving you investment advice. We believe in a strategic buy, hold, and rebalance investment strategy and will recommend that you take this approach with your investments. We typically recommend that you reallocate your portfolio back to the target percentages on an annual basis. While we strive to provide you with the highest possible return for a given level of risk, we cannot guarantee that you will achieve a certain level of return or meet your investment objectives. Your investments, including your original principal, may lose value if you follow our recommendations. Investing in mutual funds and exchange traded funds involves risks including general market risk, liquidity risk, interest rate risk, currency risk, and political risk, among others. Investing in index funds, in particular, exposes you to the risk of tracking error, which is defined as the fund s 6 of 10

7 deviation from its stated benchmark. We encourage you to read each fund s prospectus prior to investment for a discussion of its particular risks. Hourly Consultation clients may request our investment advisory services and limit the scope of the engagement based on their individual needs. Section F Disciplinary Information Clarus Financial Planning, Inc. and its personnel have never been the subject of a legal or disciplinary event. Section G Other Financial Industry Activities and Affiliations Clarus Financial Planning, Inc. and its personnel are not involved in other financial industry activities. Section H Code of Ethics, Participation or Interest in Client Transactions, and Personal Trading As a fiduciary, we have a duty to act solely in the best interest of each client and with the utmost integrity in all of our dealings. Our fiduciary duty is a core aspect of our Code of Ethics. In addition, we adhere to the Code of Ethics and Professional Responsibility adopted by the CFP Board of Standards, Inc. We accept not only the obligation to comply with the mandates and requirements of all applicable laws and regulations but also the responsibility to act in an ethical and professionally responsible manner in all professional services and activities. We follow the following core principles: Integrity We shall offer and provide professional services with integrity. Objectivity We shall be objective in providing professional services to clients. Competence We shall provide services to clients competently and maintain the necessary knowledge and skill to continue to do so in those areas in which we are engaged. Fairness We shall perform professional services in a manner that is fair and reasonable to clients, principals, partners, and employees, and shall disclose conflicts of interest in providing such services. Confidentiality We shall not disclose confidential information without the specific consent of the client, unless in response to proper legal process, or as required by law. Professionalism Our conduct in all matters shall reflect credit on the profession. Diligence We shall act diligently in providing professional services. We may hold personal positions in the investments we recommend to you and other clients. If we happen to purchase or sell the same mutual fund or exchange traded fund at or about the same time that you do, it is purely coincidental. We know when we provide you with trade recommendations, but you control the timing of those trades. We do not purposefully time our trades around trades that our clients are making. We do not recommend that you or any other client invest in any security in which we have a material financial interest. We do not buy securities from, sell securities to, or loan money from or to our clients. Section I Brokerage Practices Clarus Financial Planning, Inc. is not affiliated with any bank, custodian or brokerage firm. If you engage us to provide investment advice, we will offer to work with your current brokerage firm or we will recommend one to you. Our recommendation will be based solely on what we think is in your best interest. We do not receive any form of compensation from brokerage firms or custodians. 7 of 10

8 Section J Review of Accounts We do not provide continuous monitoring of our financial planning and investment advisory recommendations. Annual investment reviews are provided for Financial Planning Program clients and are recommended for Hourly Consultation clients who are responsible for initiating the reviews. Section K Client Referrals and Other Compensation We are not compensated nor do we compensate others for client referrals. Section L Custody We do not take custody of your assets. You will receive statements directly from the custodian you choose to hold your assets. Section M Investment Discretion We do not provide discretionary investment management services, so issues related to investment discretion are not applicable. Section N Voting Client Securities We do not have authority to vote on issues related to our clients securities. You will receive proxies and other solicitations directly from the custodian or transfer agent for your investments. You will be responsible for directing how proxies are voted on your behalf. Section O Financial Information Due to the nature of our services, we are not required to provide an audited balance sheet in this disclosure document. We do not have any financial conditions that require further disclosure. Section P Requirement for State-Registered Advisers Please see the Brochure Supplement below for information about our executive officers and management persons. Part 2A Appendix 1 Wrap Fee Program Brochure (Not Applicable) Clarus Financial Planning, Inc. does not sponsor a wrap fee program, so issues related to a wrap fee program are not applicable. 8 of 10

9 Form ADV Part 2B Brochure Supplement February 17, 2015 Liane Warcup, CFP Clarus Financial Planning, Inc. A State of Illinois Registered Investment Advisor 312 W. State Street, Suite 106 Geneva, IL Phone: Info@ClarusPlans.com This brochure supplement provides information about Liane Warcup that supplements the Clarus Financial Planning, Inc. brochure. You should have received a copy of that brochure. Please contact Liane Warcup at or Info@ClarusPlans.com if you did not receive Clarus Financial Planning s brochure or if you have any questions about the contents of this supplement. Additional information about Liane Warcup is available on the SEC s website at Click on the Investment Adviser Search link and then search for Investment Adviser Representative (IAR) using Liane Warcup. 9 of 10

10 Educational Background and Business Experience Name: Liane Warcup, CFP 1 Year of Birth: 1969 Education: MPM - Masters in Public Sector Financial Management, University of Maryland, College Park, MD (1993) BS - Political Science, Chinese Minor, United States Air Force Academy, Colorado Springs, CO (1991) Experience: President and Owner - Clarus Financial Planning, Inc., Geneva, IL (since 2005) Financial Consultant - AG Edwards & Sons, Inc, Geneva, IL (July April 2005) Consultant - Linsco Private Ledger, Geneva, IL (February July 2003) Investment Representative - Edward Jones Investments, Federal Way, WA, (May January 2001) Finance Officer US Air Force ( ) 1 The CFP certification is administered by the CFP Board of Standards, Inc. To earn CFP certification, applicants must pass the CFP Certification Examination, have a bachelor s degree from an accredited college or university, have three years of full-time relevant personal financial planning experience, and agree to adhere to CFP Board s Code of Ethics and Professional Responsibility, Rules of Conduct, and Financial Planning Practice. Details on initial CFP certification are available at CFP certificants are required to complete 30 hours of continuing education and to renew an agreement to be bound by the Standards of Professional Conduct every two years. Disciplinary Information Liane Warcup has not been the subject of any legal or disciplinary events. Other Business Activities Liane Warcup is not engaged in other business activities. Additional Compensation Liane Warcup does not accept or receive additional economic benefit (i.e. sales awards or other prizes) for providing advisory services to clients. Supervision Liane Warcup is solely responsible for the advice given to clients by Clarus Financial Planning, Inc. You can contact her at or Info@ClarusPlans.com, or at the address provided on the cover page of this Brochure Supplement. Requirements for State-Registered Advisers Liane Warcup has not been involved in an arbitration claim, civil proceeding, self-regulatory organization proceeding, administrative proceeding, or bankruptcy petition. 10 of 10